Must a Boulder Designs franchisee comply with the Covenant of Non-Competition after termination or expiration?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges the restrictive covenants contained in this Section and in Section 17.1 are fair and reasonable and will not impose any undue hardship on Franchisee or any Covered Person, since Franchisee and Covered Person has other considerable skills, experience, and education which afford Franchisee and Covered Person the opportunity to derive income from other endeavors, and are justifiably required for purposes including, but not limited to, the following:
- i. protecting the Trade Secrets and other Confidential Information of Franchisor;
- ii. inducing Franchisor to grant a Franchise to Franchisee; and
- iii. inducing Franchisor to incur costs in training Franchisee and its officers, directors, executives, managers, Internal Managers and any other Covered Person, if necessary.
Except as otherwise approved in writing by Franchisor, neither Franchisee, nor any Covered Person shall, for a period of three years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for themselves or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other business entity:
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, a franchisee is subject to a post-termination covenant not to compete. For a period of three years after the expiration or termination of the Franchise Agreement, the franchisee and any covered person are restricted from engaging in competitive business activities, unless otherwise approved in writing by Boulder Designs.
The non-compete restrictions include not directly or indirectly engaging in a competitive business for themselves or with any other entity. These restrictions are acknowledged by Boulder Designs as fair and reasonable, considering the franchisee's skills, experience, and education, which allow them to pursue other income-generating activities. The restrictions are deemed necessary to protect Boulder Designs' trade secrets, confidential information, and to justify the costs incurred in training the franchisee and their personnel.
Moreover, if a Boulder Designs franchisee desires to continue operating a non-competitive business after termination, they must notify Boulder Designs in advance and make all necessary modifications to distinguish the business's appearance from other Boulder Designs franchises. The franchisee must also avoid actions that could reduce customer goodwill towards Boulder Designs or its franchisees. These measures ensure that the terminated franchisee does not unfairly capitalize on the Boulder Designs brand or system after the agreement ends.